The Miami Herald editorial: “Jackson Memorial will rebound.”

Posted on Mon, May. 07, 2012

Jackson Memorial will rebound

The provision of public health presents a hybrid model that’s not easily analyzed using market forces. For that matter, the healthcare industry itself doesn’t strictly respond to market forces.Economists agree that the bulk of healthcare demand — particularly acute and emergency services — doesn’t fluctuate with price. Most people would mortgage their house and go without all but the most basic necessities so that a loved one will receive reconstructive surgery after an accident, or be treated for heart disease, or for removal of a cancerous polyp.

The supply side of the public-health service industry is also unique in that it doesn’t permit much price elasticity. Government cannot deny any citizen an emergency operation or other serious health service based on that patient’s inability to pay.

Premised on the above observations, it’s incumbent on public hospital administrators to avoid simplistic strategies based on classic notions of competitiveness. For example, a public hospital cannot lay off 10 percent of its workforce in one fell swoop in order to be competitive with private hospitals. The private sector cannot possibly pick up the slack.

Jackson Memorial Hospital President Carlos Migoya has done well on the revenue side by aggressively pursuing a bid for provision of a yearly medical exam on all county employees. He has done well to cut costs by aggressively renegotiating the contract with University of Miami physicians and by entering into a global procurement contract that guarantees bonded savings of $25 million. But he erred in the recent labor negotiations and should reconsider the proposed dismissal of approximately 900 nurses and nonprofessional staff.

Let’s assume Migoya is right that at least 350 nurses should be hired on “flex time,” meaning variable work schedules that adjust to peak hours of demand. Rather than dismissing 500 nurses and rehiring 350 part-time replacements, he should have made clear to the union that a high proportion of the nurses he considers unnecessary simply need a contractual adjustment as opposed to a wholesale dismantling that could result in service disruptions.

Second, let’s assume that there are 260 unnecessary nursing assistants and paraprofessionals. Firing those 260 employees, whose blended pay rate is $18 an hour, saves about $6.5 million. That’s about one-tenth of 1 percent of the county budget. It’s only a bit more than the executive benefits historically paid by the county, added to the $1.25 million paid to five newly minted deputy mayors. It’s much less than the $10 million we commissioners took from reserves to compensate for the last 1 percent proposed to be deducted from all employees for medical insurance.

JMH is battling to rebuild itself as a premier hospital. Draconian cuts in workforce should be avoided at all costs, lest the radical nature of the needed cuts kill the “patient” while trying to save it.